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US Dollar strength will make it hard for bulls as long as risk-off sentiment persists.
My previous GBP/USD signal on 16th February produced a profitable short trade from the bearish reversal at the resistance level which I had identified at $1.2171.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken prior to 5pm London time today.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2071, $1.2059, or $1.1958.
- Place the stop loss 1 pip below the local swing low.
- Move the stop loss to break even once the trade is 25 pips in profit.
- Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2148, $1.2264, or $1.2290.
- Place the stop loss 1 pip above the local swing high.
- Move the stop loss to break even once the trade is 25 pips in profit.
- Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
GBP/USD Analysis
I wrote in my previous forecast for the GBP/USD currency pair that bearish pressure was increasing, including a new lower resistance level at $1.2071. I thought that if $ 1.2071 was hit first, and produced a solid bearish reversal, this could be a good short-term short-trade entry, targeting $1.2000.
This was a good call as it was an accurate forecast and produced a profitable trade opportunity.
Although the US Dollar has been relatively strong on the risk-off sentiment which is currently gripping the market, the British Pound held up well yesterday and we saw an up day in this pair.
We see the price caught between two close support levels which begin at $1.2071, and what looks likely to be a pivotal point at the resistance at $1.2148.
I think it will be wise to wait for a breakout from this price range before trading, as the range is quite narrow and very well-defined.
If we get two consecutive higher hourly closes above $1.2150, I will enter a long trade.
Alternatively, if the price gets established below $1.2058 later, it will be quite likely to continue falling by enough to retest the big round number at $1.2000. Yet, this would likely be more difficult to trade on the short side, as the real room to rise is above $1.2171. So, a bullish breakout will likely be a better opportunity if it sets up.
There is nothing of high importance scheduled today concerning the GBP. Regarding the USD, there will be a release of the FOMC meeting minutes at 7pm London time.
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